Corporate Governance Reform: The Impact of the 2024 UK Corporate Governance Code

The Financial Reporting Council published the revised UK Corporate Governance Code in January 2024, with most provisions applying to financial years beginning on or after 1 January 2025. These reforms represent the most significant update to UK corporate governance standards in a decade, with particular implications for board effectiveness, risk management, and internal controls reporting.

The revised Code introduces enhanced requirements around board leadership and company purpose. Boards are now expected to describe the outcomes they are seeking to achieve for the company and its stakeholders, assess how these have been delivered, and explain any actions taken where outcomes fall short of expectations. This moves beyond the previous comply-or-explain approach towards a more substantive accountability framework.

Internal controls and risk management receive particularly close attention. The Code now requires boards to make a declaration on the effectiveness of material internal controls, including financial, operational, and compliance controls. This declaration must be supported by a robust assessment process, and companies are expected to explain the basis of their assessment. This represents a significant step towards the type of management attestation found in SOX compliance, though the FRC has stopped short of requiring external audit of internal controls.

The reforms also strengthen requirements around audit and assurance. Audit committees must establish and maintain an audit and assurance policy setting out how external audit, internal audit, and any other assurance activity contribute to providing confidence in the annual report. This policy must be approved by shareholders on a triennial basis, creating a new form of shareholder engagement on assurance matters.

Board diversity receives enhanced prominence in the revised Code. Companies are expected to set targets for board and senior leadership diversity, report against those targets, and explain their approach to succession planning. The FCA listing rules complement this with specific targets including at least 40 percent female representation on the board and at least one director from a non-white ethnic minority background.

At Masl Legal, our Corporate Law and Governance team advises boards and company secretaries on implementing these reforms effectively. We help companies develop compliant governance frameworks that go beyond box-ticking to deliver genuine improvements in board effectiveness and accountability.

Companies should begin preparing now for the enhanced disclosure requirements. A gap analysis of current governance practices against the revised Code is an essential first step.